Amazon has made two strategic moves aimed at expanding the size and capabilities of its Amazon Leo low-Earth orbit (LEO) subsidiary, signing a definitive merger agreement with Globalstar and partnering with Apple to provide connectivity services to the iPhone and Apple Watch.
The announcement says that the three potential benefits of the deals are accelerating innovation and expanding connectivity options, strengthening resilience for the private and public sector, and driving economic growth while closing the digital divide.
Globalstar is a mobile satellite services (MSS) operator working in the non-geostationary orbit and direct-to-device (NGSO and D2D) sectors. Assuming the deal closes, Amazon will acquire Globalstar’s satellite operations, infrastructure and assets. These include MSS spectrum licenses with global authorizations.
Amazon provided key details of the agreement. It says Globalstar stockholders will elect to receive for each share of Globalstar common stock they own either $90.00 in cash or 0.3210 shares of Amazon common stock with a value capped at $90.00 per share. This consideration is subject to a proration mechanism that caps aggregate cash elections to a maximum of 40% of total Globalstar shares and automatically converts excess cash consideration into stock consideration on a pro rata basis.
The total transaction consideration is also subject to a downward adjustment of a maximum $110 million in the event Globalstar does not achieve certain operational milestones, the press release says. Globalstar stockholders holding approximately 58% of the combined voting power of the outstanding shares of Globalstar common stock have approved the transaction by written consent. The transaction is expected to close next year.
Linking to iPhone and Apple Watches
Amazon’s partnership with Apple focuses on D2D services to iPhone and Apple Watches. Currently, Globalstar provides satellite connectivity services to Apple Watch Ultra 3 and iPhone 14 or later devices. Amazon will continue supporting devices that currently use Globalstar’s LEO constellations as well as those to be launched.
“There are billions of customers out there living, traveling, and operating in places beyond the reach of existing networks, and we started Amazon Leo to help bridge that divide,” Panos Panay, Amazon’s Senior Vice President of Devices & Services, said in a press release.
“By combining Globalstar’s proven expertise and strong foundation with Amazon’s customer-obsession and innovation, customers can expect faster, more reliable service in more places — keeping them connected to the people and things that matter most. We’re excited to support Apple users through the Leo D2D system and look forward to working with mobile network partners to help extend coverage to every corner of the planet.”
Amazon Leo is making announcements at a fast pace.
- In February, it entered into a partnership with Amazon Web Services and AT&T to combine the carrier’s fiber network with AI and cloud capabilities of AWS.
- Amazon LEO is expanding organically as well as by acquisition. Also in February, the Federal Communications Commission (FCC) reportedly approved the company’s application to place 4,504 more satellites into orbit.
- Amazon Leo announced a preview phase for select customers last November.
